FIFA saga confirms sports business is serious business

by atom bash

Investigations of large payments to and from the extended network of officials in the FIFA network that governs international soccer continue to grab headlines. At the same time, the news is showing that payment amounts that used to seem staggering or suspicious in the traditional world of amateur sports have become fairly commonplace. When the numbers are finally put in perspective, it may look like a long overdue update to sports and non-profit club regulation will be more valuable than more disruptive investigations that leave many sports leaders confused about how to manage international federations.

Yesterday, Michel Platini, the veteran soccer player who currently leads the European soccer federation called UEFA, sent a letter to all of the leaders of the national soccer federations participating in UEFA to clarify recent reports about payments made by FIFA to Platini. The amount Platini received, almost US $2.1 million, would seem like a very large payment to most people. In fact, a salary survey published by the Sports Business Daily shows Platini was paid at a sports industry average level for senior executive functions for the four years he was engaged by FIFA, the basis for Platini receiving this payment. Many people work very hard just to make $100,000 a year, but they do not have to work on weekends and holidays all the time like sports industry executives or have their every decision critiqued on the sports pages. Platini also has an exceptional athletic career behind him, including three FIFA championship awards as a player with the Juventus soccer team. Platini was careful to point out in his statement that he declared the $2.1 million payment and paid taxes on it.

Some of the other FIFA business activities being investigated do not appear to be as easy to explain. Rafael Esquivel of Venezuela, Eugenio Figueredo of Uruguay, and Eduardo Li of are all contesting extradition requests from the U.S. Department of Justice, which suspects them of having arranged the sale of marketing rights for some 2018 World Cup assets much too cheaply. It sounds sinister, but there is no evidence that any other creditworthy business was willing to pay more.

The Connecticut Open of Tennis at Yale is one of the few premiere sports events that actually discloses financial terms of sponsorships and marketing rights. (The affiliation with Yale University makes it mandatory). These figures tell a very different story and may be all that is required to have the case against the FIFA officials dropped or reduced to a minor offense. The Connecticut Open features many of the world’s top seeded tennis players and is televised in premium markets around the globe. But a Platinum Sponsorship starts at $80,000 and a Gold Sponsorship starts at just $35,000. Based on these benchmarks, the FIFA officials charged with underpricing FIFA sponsorships did nothing unusual, but the government officials charging them did very sloppy preparation or relied on interns who did not know what they were doing at all.

The FIFA story is getting very messy. But it is becoming an important reminder to sports executives that they need to tell their story and not let casual observers with no industry expertise tell the story for them. It is still very difficult to arrange all of the essential components to finance international sports competitions. The recent withdrawal of Boston’s campaign to bid for the 2024 Olympics showed once again that even very talented, wealthy people cannot always master this challenge. FIFA President Sepp Blatter’s claim that he personally did nothing wrong may be true, but he and his staff need to do a much better job of educating the sports media about the financial realities of sports business.